The Earl of Lytton: My Lords, before the noble Baroness sits down, will she make clear beyond doubt that it is the Government's intention that on Royal Assent the Bill will come into force with the practice note, whatever state it is in? I was not clear, but I think that is what she meant.

Baroness Farrington of Ribbleton: My Lords, yes, that was what I intended. I hope I made equally clear that it is in the context of all the assurances I have been able to give and the necessity to update and amend the practice note in consultation and close co-operation with members of the professions.

The Earl of Lytton: My Lords, I am grateful to the noble Baroness for that detailed response. As usual, she has answered with great clarity and I am grateful for that. I am also grateful to her and to the noble Baroness, Lady Hamwee, and the noble Earl, Lord Courtown, for their kind comments about my expertise in this field. I do not feel that I am an expert at all; indeed, the Minister made a good fist of demolishing my amendment on technical grounds. But such is life.

I am particularly heartened to know that what has been said in Committee and today will inform the production of the practice note. I am pleased to see the Minister nod in affirmation of that. Therefore, there will be a reasonably seamless approach between the provisions of the Bill, what was said in Committee, the Minister's reassurances today and the practice note.

As was said by the noble Lord, Lord Elton, if the Government do not accept that the Bill should be amended, any doubts about interpretation will have to be picked up in the practice note. Otherwise, if there is confusion about the meaning of the Bill and its meaning is not made clear in the practice note, matters will inevitably go back to the courts. That scenario brought about the need for the Bill in the first place. In the Government's view, the Anston Properties case altered the treatment of repair and today we are dealing with

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the legislation. I should be fearful of that happening again and I hope that we can avoid it. I wish to ensure that the Bill is clearly understood by practitioners.

I feel that I have taken up enough of your Lordships' time today. I am grateful for the support of all noble Lords and to members of the outside professions who have been of enormous assistance to me. I look forward to discussing the production of the practice note with the Minister's department and the Valuation Office. There is a considerable degree of understanding between us. There will always be problems about the precise meaning of certain words, but provided that we have reached a sufficient level of understanding that will have to be taken on trust. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Pollution Prevention and Control Bill [H.L.]

3.55 p.m.

Read a third time.

Clause 1 [General purpose and definitions]:

Lord Jenkin of Roding moved Amendment No. 1:

Page 1, line 16, at end insert ("including activities in the territorial waters and the sea designated within the meaning of the Continental Shelf Act 1964,")

The noble Lord said: My Lords, I return to a matter that we discussed in Committee and I undertake not to keep the House for more than a moment or two. At the end of that debate on 15th February, I asked the Government to confirm that the offshore oil and gas industry was covered by the Bill, because nowhere does that appear. Nor does it appear in the Council Directive 96/61/EC, which it is the purpose of the Bill to implement. An earlier environmental directive on large combustion plants expressly excluded plants on off-shore installations.

At the end of the Committee stage debate, the Minister made it abundantly clear:

"that legal advice in relation to the activities listed in the directive and the legal advice of the Commission is that it should apply to the Continental Shelf and beyond territorial waters unless there are indications to the contrary--and there are none--in the IPPC directive".--[Official Report, 15/2/99; col. 527.]

My point is that, for the first time, the Bill extends integrated pollution control--or, as it now is under the directive, integrated pollution and prevention control--to installations offshore. I say with a great deal of pleasure that the Government in their wisdom have decided, as we debated on Report, that there should be express mention of that in Clause 1 of the Bill. That is the reason why I have tabled Amendment No. 1. It simply makes it clear that the activities in the definition subsection should include:

"activities in the territorial waters and the sea designated within the meaning of the Continental Shelf Act 1964".

It is a simple point. The Minister has accepted the purpose clause which refers to implementing the directive. I believe that it should be set out on the face of the Bill that it extends to the Continental Shelf. It is

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a comparatively simple point, but I hope at this late stage in this House, or perhaps when the Bill reaches another place, the Minister will feel able to meet the case. I beg to move.

Lord Renton: My Lords, I support the amendment and regard it as important. It is wrong that what happens under the Continental Shelf Act 1964 should be left to the uncertainty of being dealt with or not at some future stage by regulations. This is a matter which internationally, as a matter of pride, we should get right within the contents of the Bill. My noble friend Lord Jenkin has moved a very important amendment.

Lord Dixon-Smith: My Lords, in rising to support my noble friend Lord Jenkin, I express the hope-- I cannot say "wish"--that the Minister might be able to accept the amendment which does nothing to alter the substance of the Bill other than to make explicit on its face what is already implicit in what is happening and what appears in the draft regulations which we have already seen.

If we are legislating in this way--and we already are--there are other industrial processes which take place over and in the Continental Shelf area, such as fishing, which are or might also be affected. The draft regulations apply simply to the business of oil installations. I am well aware that fishing and indeed shipping, which is another industrial occupation, if one may put it that way, might well be affected by the regulations. They are regulated at the present time by many international conventions.

Can the Minister tell me whether we are altering the status of those industries by this extension to the Bill which will take place whether or not the proposed words are added to it?

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, I regret that I cannot accept the amendment. First, as I have explained previously, it is unnecessary. Clause 1(2) makes clear that activities are covered whether carried on at particular premises or otherwise. The noble Lord, Lord Jenkin, quoted both our legal advice and that of the European Commission, indicating clearly that provision for offshore activities is included.

Subsection (2), taken in conjunction with Clause 5(9), is quite explicit along the lines the noble Lord would wish. Clause 5(9), refers to territorial waters; the sea in any designated area; and the sea in any area specified under the Oil and Gas (Enterprise) Act 1982. That is a precise and clear formulation.

The noble Lord's formulation, in so far as he seeks to clarify, would not clarify sufficiently. The amendment excludes that area of the sea defined in the Oil and Gas (Enterprise) Act 1982, which, I understand, relates to developments straddling the boundary lines between the territorial waters of the United Kingdom and those of another member state.

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The amendment would not do precisely what the noble Lord wishes. In any case, clarification is to be found in the last clause of the Bill. I hope that with that explanation the noble Lord will see fit to withdraw the amendment.

Lord Jenkin of Roding: My Lords, I understand the point that the noble Lord the Minister makes about Clause 5. Of course, he is right. That is the clause concerned with the regulation-making powers. We are dealing in Clause 1, as amended after a good deal of debate and after the intervention of the Delegated Powers and Deregulation Committee, with the overall purposes of the Bill. My intention was to make sure that the extension to the North Sea is clearly within those purposes. That is why I added the definition at the end.

I have used the arguments advanced by the noble Lord, Lord Whitty, too often myself not to recognise that saying that an amendment is unnecessary carries some weight in government departments, and even occasionally in the two Houses of Parliament. So, not wanting to prolong the debate, although I still think it is a pity that there is not the reference I have proposed in Clause 1, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 [Regulation of polluting activities]:

Lord Pearson of Rannoch moved Amendment No. 2:

Page 2, line 17, at end insert--
("( ) Regulations under this section shall require individuals or bodies responsible for carrying out such activities as are referred to in the regulations (not being a category of activity referred to in Annex I of Council Directive 96/61/EC) to employ the best available techniques not entailing excessive cost (in this section referred to as "BATNEEC") to be used for minimising the pollution which may be caused to the environment as a whole by those activities:
Provided that--
(a) regulations under this section may specify circumstances where a more or less restrictive regime than BATNEEC may be required either to comply with European or other international obligations, or on account of other circumstances;
(b) where regulations are made pursuant to paragraph (a) above, they shall be accompanied by a statement explaining why such a more or less restrictive regime should be applied; and
(c) if the regime to be employed is more restrictive than BATNEEC, the regulations embodying that regime shall not be made unless a draft of the statutory instrument containing the regulations has been laid before, and approved by a resolution of, each House of Parliament.")

The noble Lord said: My Lords, noble Lords could be forgiven if their eyes glaze over as they try to understand Amendment No. 2 on the Marshalled List, especially if they are not familiar with this somewhat technical but far-reaching Bill and its extraordinary--indeed, almost unprecedented--passage through your Lordships' House.

I shall not repeat the history of the Bill now at Third Reading because I placed a potted version on the record at Report stage last week, at cols. 1382-1385 of Hansard of 13th May. Suffice it to say that the Bill imports an EU directive, No. 96/61/EC, into British law, and

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combines that directive with our existing Environmental Protection Act 1990. In doing so the Bill removes the first 28 sections of that Act from the statute book and replaces them with sweeping regulation-making powers. It is very unfortunate that those regulations will not be put in front of us for consideration until after the Bill has become law. The Bill thus sets up a new system of pollution prevention and control in this country. It is therefore a very important Bill, even if it is inevitably rather technical.

The Bill has had a very chequered history in your Lordships' House, including a very damning report from the Delegated Powers and Deregulation Committee. However, it has been much improved during its passage through the House. Thanks are due to the Minister for his helpfulness and wisdom in that regard.

Even so, the Bill still has important and unacceptable flaws. Perhaps the most important remaining defect is that the proposed new pollution prevention and control regime is potentially disastrous for small businesses, even if large businesses feel that they may be able to live with the situation. To understand why this is so, I fear that I have to try your Lordships' patience by describing the difference between two pollution control regimes, called, in the jargon, "BAT" and "BATNEEC". Before your Lordships disappear into the Library without so much as a backward glance, may I assure the House that the difference between the two is really quite easy to understand.

BATNEEC requires that pollution should be prevented and controlled using best available techniques not entailing excessive cost. "Not entailing excessive cost" is the "NEEC" bit. This is the regime imposed by our Environmental Protection Act 1990. It is obviously potentially much less expensive, especially for small businesses, than the regime required by the EC directive, which is BAT, or, simply, "best available techniques" without the requirement that those techniques should not entail excessive cost.

It is true that the BAT regime does say that costs and advantages must be taken into consideration, but that is altogether different from saying that proposals should not entail excessive cost and having that proviso on the face of the Bill, as in Section 7 of our Environmental Protection Act 1990, which is being swept away by the Bill.

The amendment ensures that small businesses can continue to prevent and control pollution under our present BATNEEC regime, which, as the Minister was good enough to agree last week, is working well, while only the larger businesses identified in Annex I of the directive move under the BAT regime, as the directive requires.

I hope that the Minister will be able to accept the amendment which reflects precisely what the directive requires, what the Government's own explanatory notes said was the intention of the Bill when they produced it last November, and, perhaps more important, what the Minister said from the Dispatch Box a week ago was the aim of the Bill.

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Let me start with the directive. I quoted this aspect of the directive in full last week; I shall not repeat myself. The point is that the directive brings us BAT, best available techniques, setting up a very wide-ranging regime which merely has to,

"take into consideration the costs and advantages",
of the best available techniques which industry is required to employ to prevent and control pollution. But the directive makes clear that its BAT regime is only to apply to the categories and size of industrial activities which are listed in the directive's Annex I. These are very detailed and clearly apply to large installations which are likely to be owned and operated by large businesses. So this amendment respects the directive fully because it places all the activities listed in Annex I of the directive under the BAT regime, leaving the rest of British industry, which amounts, really, to our smaller businesses which are largely incapable of producing the kind of pollution at which the directive is aimed, under the present successful BATNEEC regime as required by our existing Environmental Protection Act 1990.

The amendment also gives the Government power to vary the BATNEEC regime when necessary, beyond what is required by the directive, by affirmative resolution, which is surely sensible and helpful to the Government and in no way conflicts with the directive. So the amendment fully respects the directive.

I come to what the Minister said last week. He said:

"The Bill is not about killing off 135,000 small businesses; it will be applied to around 7,000 mainly large businesses".--[Official Report, 13/5/99; col. 1387.]
That is great because those, of course, are the 7,000 large businesses covered by Annex I of the directive and, incidentally, the same 7,000 large businesses, as far as I can make out, referred to in the Government's Explanatory Notes issued on 26th November. They are the same 7,000 odd businesses which become exposed to the BAT regime by the amendment before your Lordships rather than to the existing BATNEEC regime which will apply to the rest of industry.

The Official Report of our debate last week grows less clear when my noble friend Lady Blatch and I pressed the Minister and pointed out that the Bill as drafted does not limit the open-ended BAT regime to 7,000 or so larger businesses and industrial activities. We pointed out that the Bill as drafted cancels the BATNEEC regime altogether and introduces BAT for the whole of British industry.

The Minister then appears to have been somewhat misled by his brief because he said:

"The incorporation of the IPPC regime",
by which he meant the directive,

"will not extend these controls to areas which were not already covered by the 1990 Act".
But then, with great respect, he appears to have contradicted himself because he went on to say:

"Clearly, those small businesses already covered by the 1990 Act will still be covered by this regime".
By that, I presume he meant the new regime or BAT, instead of BATNEEC. Perhaps he could clarify that.

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Then the Minister went on to make another statement which is clearly wrong. He said:

"Schedule 1 clearly restricts that to plants and installations, most of which will be owned by large businesses".--[Official Report, 13/5/99; col. 1388.]
Schedule 1 to the Bill contains no such restriction. It clearly abandons BATNEEC for the whole of British industry because it imports BAT, as required by the directive in paragraph 20 of the schedule to the Bill and it nowhere mentions BATNEEC.

The Bill itself makes clear, as I mentioned last week, that the new regime set up by the Bill is not only to accommodate the directive but also, and I again quote from the Bill, to regulate,

"otherwise than in pursuance of that Directive, activities which are capable of causing any environmental pollution; otherwise preventing or controlling emissions capable of causing any such pollution".
The Bill confirms that those activities include,

"industrial or commercial activities ... carried on on particular premises or otherwise".
So the Bill as drafted really does introduce BAT to the whole of British industry and commerce. This amendment would, however, put the Bill precisely on all fours with what appears to be the Government's intention, and so I hope the Minister can accept it.

In conclusion, I should place on the record two brief paragraphs of a letter written to me by the Federation of Small Businesses since our debate last week. The federation represents the 135,000 small businesses to which the Minister referred in his remarks at col. 1387, which I have quoted.

The letter goes as follows:

"On behalf of our members in particular and small business in general, I write to thank you most sincerely for your vigilance in bringing our attention to the removal of a valuable protection for small firms, namely BATNEEC.

Please also convey our gratitude to the noble Lords who rose to support small businesses in the debate. This provides an excellent example of the true value of the upper chamber which should continue to reflect the concerns of business".
If the Minister can accept this amendment, it would do much to set the mind of small business at rest and earn their gratitude, which he will have richly deserved. I beg to move.

4.15 p.m.

Lord Stoddart of Swindon: My Lords, I support this amendment. My noble friend will not be surprised by that as he will no doubt have noted my remarks on Report. The amendment is asking that BATNEEC should apply not only to small businesses, although we concentrated on small businesses on Report, but to all businesses. Bureaucracy can impose costs which are not reasonable. Those who regularly read Christopher Booker's column in the Sunday Telegraph will have ample evidence as to how the bureaucracy of officialdom imposes techniques which are not really necessary. They are gold-plated. That applies not only to small businesses but also to large businesses.

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Let us not forget that costs imposed on all businesses are usually passed on to the consumer. So, in ensuring that only reasonable costs are entailed and incurred, we are helping the consumer.

We want adequate and proper pollution controls but they need not be as expensive as, sometimes, officials believe they should be. Therefore, in my view, the amendment is extremely sensible.

One of the problems in this country is the growing power, extent and range of the bureaucracy and the growing power of SEFRAs which impose charges on businesses. They are self-financing and can impose their will without parliamentary or ministerial control. Frankly, some of their activities are frightening and damaging to our economic life. Therefore, it seems that this amendment helps to deal with that problem. It does not solve it entirely but it goes some way towards it.

At the same time, it recognises that there may be rare circumstances in which BATNEEC does not apply and should not apply. Therefore, the power is given to Ministers to bring forward alternatives to BATNEEC, provided that Parliament is aware of the circumstances and what is entitled by the changed circumstances in imposing BAT instead of BATNEEC.

Therefore, the amendment is well thought-out and helpful. It will be helpful not only to small businesses but to all businesses and it will certainly be helpful to the consumer because costs may very well be reduced. I know that my noble friend is receptive to good ideas--I do not want to praise him too much because it might damage his career--and I hope that he will consider this amendment and accept it. It is a good amendment. It will not hurt his Bill. Indeed, it will help it from the democratic point of view.